The trickle down benefits of liberalisation

Everyone seems to be interested in making money in Shanghai

Bibek Debroy

I wrote about impressions of China in my last piece and let me continue from where I left off. As I said earlier, the first thing that hits you is the quality of infrastructure, especially airports and roads. Nowhere is this as evident as in Shanghai. Shanghai is of course an old city. It is one of the treaty ports opened up to the West in the 19th century. As such, Westernisation is not new to Shanghai, although the present form of Westernisation is somewhat different from the earlier version. You find traces of this earlier Westernisation along the ‘Bund’ on the Huangpu River, which is a tributary of the Yangtze. At night, the Bund shimmers like a necklace with glittering lights and everyone seems to be out, walking along it. The impression one forms is of a young country. Where have all the old people gone?

It is a sobering thought that Shanghai’s per capita income is $4,180 and last year, Shanghai’s real income grew at 10.8 per cent. Last year again, Shanghai’s exports were $25 bn and $3 bn worth of foreign direct investment came into Shanghai. 1999 and 2000 were relatively bad years. In 1998, $5 bn worth of FDI came into Shanghai. 27 per cent of the city’s population uses mobile phones, 20 per cent has access to the Net. Mobile phones are extremely common, not only in Shanghai, but everywhere. Everyone seems to sport one. If the van is parked in the parking lot and has to be called, your guide uses a mobile phone to call the driver. The tariff seems to vary from place to place, but is generally two or three times the land-line rate. Not more.

Internet usage is also common and every hotel has Internet access in its business centre. The rate varies between 2 and 3 yuan (1 yuan = Rs 6) per minute. Somewhat expensive. But not much more than rates at 5-star hotels in India. I don’t have the time to check out rates at Internet cafes that you occasionally see on the streets, next to Kentucky Fried Chicken and McDonald’s. However, the rates at home are 1 yuan per hour and there are three Internet Service Providers, all connections through the phone and not through the cable. In fact, cable connections are strictly controlled. No foreign channels at home, except for Discovery and ESPN, suitably dubbed in Chinese. Hotels are an exception. You get CNN, HBO and Star Movies. No ads on the movie channels though.

There is some Indian presence in Shanghai, in sectors like pharmaceuticals, consumer electronics and software, other than restaurants. Apart from the shopping district along Nanjing Road, there is another traditional shopping district next to Yuyuan Garden, a garden that was built many years ago by the Pan family, related to the Ming dynasty. I sit in the square there and chat to a shopkeeper who owns a jewellery store. He has business connections overseas, in the United States. He hates Beijing. Shanghai is the place to be. Shanghai is the place to make money. Everyone seems to be interested in making money. No one gives a damn about politics. Perhaps Shanghai also represents the trickle down benefits of liberalisation, away from initial liberalisation in southern coastal provinces like Guangdong. Not surprisingly, Shanghai has plenty of political clout in Beijing.

The Shanghai Stock Exchange has only electronic trading, and there are around 30 million retail investors in China. Shares are divided into two categories, one open to domestic investors, the other to foreign ones. There is a statue of a huge bull on the ground floor, no bear. A bear is a bad omen. Perhaps the bull is also symptomatic of the Chinese economy. There are a couple of sculptures of bears fighting bulls upstairs, but the bull is invariably winning. The Shanghai Library is a completely modern one. Thanks to German technology, the retrieval of books from the stacks is completely mechanised. It takes a maximum of 20 minutes for any book (out of a total collection of 10 million) to be retrieved from the stacks. Little bags hang from conveyor belts and are used to transport books back and forth. The annual library budget is $9 million.

But the Shanghai Library is not a depository library. That happens to be in Beijing. There are four categories of membership — you can read Chinese books (or magazines), you can read and borrow Chinese books, you can read foreign books (plus the Chinese) and finally, you can read and borrow foreign books. Membership is free. But there is an entry fee. 10 yuan, 15 yuan, 25 yuan and 50 yuan for the four categories respectively. The Hindustan Times is the only Indian newspaper to figure in the collection. The Shanghai Museum has a wonderful collection of bronze and ceramics and the Shanghai Theatre is reminiscent of the Bolshoi.

The word Shanghai is actually composed of two Chinese words, literally meaning ‘to go to the sea’. The old Shanghai is Puxi, meaning to the west of the Pu (Huangpu) river. The new Shanghai is Pudong, meaning to the east of the Pu river. As I said earlier, Pudong is a completely new city, carved out of farmland in 10 years. This has a new international airport, in addition to Shanghai’s existing Hongqiao international airport. There are hi-tech and chemical parks in Pudong and IT hardware is moving from Taiwan to Pudong. Pudong boasts the third tallest building in the world, Jinmao Tower, with 88 storeys and the tallest TV tower in the world.

Jinmao Tower is taller than the erstwhile World Trade Centre and the Empire State Building and is bested only by Petronas Tower in Kuala Lumpur and the Sears Tower in Chicago. 55th storey and above is the Grand Hyatt Hotel, with an amazing lobby that vanishes upwards into the distant 88th storey. Below the 55th storey are offices. Next to the Jinmao Tower, the Chinese wanted to build the World Financial Centre. This will be the tallest building in the world. But this was to be built with Japanese collaboration and is stuck because of the state the Japanese economy is in.